Budgeting - A look ahead

One of the first steps in financial planning is preparing a budget.  Budgeting has a bad rap because it carries the notion of sacrifice in order to achieve gains.  Financial guru’s such as Kevin O’Leary advocate giving up your daily latte in order to focus your resources on wealth accumulation.  While that type of effort will certainly pay off, there are things you can do, that do not involve denying yourself of life’s little pleasures.  If you have recognized that your financial planning consists of spreading your paycheque around and hoping it lasts until next payday, you may benefit from simply tracking your expenditures and knowing where your money is going. 

The first step is to track your money.  Mint.com/canada is the easiest way to do this, although if you are reluctant to share your financial information with a third party, each financial institution does offer a download transaction feature whereby you can achieve the same goal.  It is a little more work though, you have to match the download type to the software you have installed on your computer and be able to operate that software.  I like Mint.com because it is all handled on the website.  A Globe Investor review of some others can be found here

If you were lucky enough to have parents that recommended you to save 10% of your first paycheque, then hopefully you followed that advice and are still doing it. That is probably the best gift you can give your child...teach them to put 10% away automatically from the very first paycheque and they will never miss it.   If not, you may want to read Rob Carrick's article in the Globe and Mail about saving and debt repayment to get a sense of where you should be in the benchmarking game.

This is where it gets tough, if you are spending more than you make, there is no easy way out....either get another job or cut back somewhere.  In order to cut back you need a roadmap for the year to ensure you know where you are going.  There are lots of budgeting tools available, including the one on Mint.com/canada, but I like a simple Excel spreadsheet to lay out the year.  Although I use my own, there is a better one available online, which is intuitive and easy to modify, and displays all the information you would want.  It is available and free, here

www.vertex42.com/Files/download/family-budget-planner.html


When you live paycheque to paycheque, it is important to take yourself beyond that time frame to gain some perspective.